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The Banks Are Coming

Technological innovation and savvy marketing are hallmarks of the financial services industry. Both have allowed financial institutions to automate and perfect a variety of complex transactions involving stock trading, annuities, 401(k) accounts, individual retirement accounts—all in the name of saving time and money.

Lately, financial leaders have begun to investigate how to use their transaction expertise to transform another industry: healthcare. While bringing their own houses to an unprecedented level of automation, financial institutions have long cast a covetous gaze at healthcare’s inefficient billing, collecting and reimbursement. Now, as the employer-based health insurance model continues to deteriorate, consumers are shouldering an increasing percentage of costs and playing a growing role in healthcare decision-making. Such consumer engagement means the healthcare sector is paying closer attention to goals such as transparent pricing, standardized quality measures and electronic medical record-keeping.

But as mass media outlets focus on skyrocketing premiums, they’ve largely missed a strong underlying shift–that financial institutions may soon wield heavy indirect influence in healthcare through their custodianship of health savings accounts. By 2010, consumer-directed health plans coupled with HSAs will make up 24 percent of the commercial insurance market, Forrester Research predicts. Someone will have to service—and safeguard—the billions in deposits that will accompany such penetration. With HSAs predicted to total as many as 25 million accounts by 2010 with $75 billion in assets and deposits, according to consulting firm DiamondCluster International, former healthcare outsiders have learned that by cutting prices and raising value, they can make a lot of money.